Look back to plan ahead for 2014
With the end of 2013 just a month away (and even closer if you plan to take the week between Christmas and New Year’s Day off), now is a good time to do a little year-end review of your business.
While the Internet is chock-full of advice on maximizing tax strategies at the end of the year, your annual review should include more than just finances. Here are a few things to consider:
Take an honest look at 2013. Look back over the past 11 months and consider what happened in your business. What good things happened? What bad things happened?
Those will probably be fairly easy to determine, but dig deeper – why did they happen? What caused the good things and can you repeat them in 2014? What were the underlying reasons for the bad things and what steps can you take to ensure they won’t happen again?
Assess your core. If you’ve ever worked with a fitness trainer, you know they emphasize working on your core muscles. These give the entire body strength and stability. The same is true with your business.
Your business is built around a core activity or set of activities, aimed at a specific market. Take a look at what those are in your business.
Are you focused enough? Do you still do what you’ve set out to do and do well, or have you let peripheral activities dilute your core? Now is a good time to determine how you can return your focus to the things you do well.
Examine your products or services. During the normal ebb and flow of business, some products or services gain more value to your customers while others wane.
Which products or services were in highest demand in 2013? Do you project that demand to continue in 2014? If so, now is the time to examine whether those products or services were priced to provide the maximum profit. If not, what can you do to increase that?
In the same light, examine which products or services performed poorly. Do you see a rebound for them in 2014? If not, are they worth keeping as part of your business?
Before cutting them completely, consider whether the declining product still creates value to key customers who buy other products and services, and how eliminating that product would affect their standing with you.
And just because a product or service no longer fits into your future doesn’t mean it won’t have value to another business. So instead of simply eliminating it, consider selling the rights to it to another business.
The customer is always right. Whether you’re selling retail, wholesale or providing business-to-business service, your business’ success depends on customers.
In the daily grind of producing products, tending to bottom lines and dealing with employee issues, it can be easy to forget the needs of the customer. Now is the time to review how your company served its customers in 2013.
Did you receive a lot of customer complaints? Or, better but more rare, did you receive a lot praise from customers? In either case, what were the underlying issues?
Step around your desk and consider things from your customers’ point of view. If you were a customer, what would make you want to do business with your company? What would make you not want to conduct business with you?
In most cases, customer service will be the key to repeat business and continued profitability.
Consider your employees. Even if you’re a hands-on boss, your employees are still probably toting a large percentage of the load in production or rendering services. That makes them a key asset – or liability – in the success of your business.
Year-end reviews are not pleasant for employee or boss. Before talking to employees individually, assess your overall staff. Do you have the right people in the right jobs? Are there certain employees who have had an unusual number of complaints from customers or co-workers?
Just as importantly, are you providing the right working conditions to make your employees productive? Safety is a critical concern, of course. But the right emotional environment can also make a difference. Employees who feel unappreciated, or who feel a supervisor is overcritical, can also suffer a reduction in productivity.
Review your sales and marketing strategies. Creating a high-quality product or service does little good if no one knows about it. Is your advertising reaching the right audience? Are the ads and sales tools you used of a quality that presents your business in the right light?
If you have a sales team, are they representing your business the way you would yourself? If one member of the sales team seems particularly successful, find out why and see how that can translate to the rest of the staff.
Look at the bottom line. Yes, finances are important. It’s been said that if you aren’t making a profit in your business then you’re engaging in a very expensive hobby.
Obviously, you should be examining your finances on an ongoing basis, but the end of the year is a good time to put things in perspective. When were your high and low months? Were they expected, and if not, what caused them?
You’ll want to compare the numbers to the budget you set up at the beginning of the year. Did you hit your numbers? Why or why not?
Examine your cash flow, your expenses and any unpaid bills, especially those that have lingered for more than 30 days.
Look at the profit you’re making. Have you optimized it to make the most you can while still offering your product or service at a competitive rate?
Taxing concerns. The end of the year always brings up concerns about taxes – how much you’ll have to pay, how to avoid them and how to become better organized for the coming year.
One thing to avoid is to start spending a lot of money before the end of the year in hopes of lower taxes. While higher expenses do help, the tradeoff is not even. Every $1 in expense may yield only 60 cents in tax savings – or a whole lot less. You could be spending more in hopes of saving a few bucks than you would just paying the higher taxes.
Talk to your tax consultant before doing any rash year-end spending.
All of this may seem like a lot of extra headaches around the holidays, but taking a few hours now to honestly examine your business will save you a lot more headaches in the future.